Donal Keane and Frederique Keane v Ulster Bank Ireland Designated Activity Company

• Jurisdiction: Ireland
• Judge: Mr. Justice Noonan
• Judgment Date: 04 December 2024
• Neutral Citation: [2024] IECA 293
• Court: Court of Appeal (Ireland)
• Docket Number: Record Number: 2024/97

Between/

Donal Keane and Frederique Keane

Plaintiffs/Appellants

and

Ulster Bank Ireland Designated Activity Company

Defendant/Respondent

[2024] IECA 293

Costello P.

Noonan J.

Pilkington J.

Record Number: 2024/97

High Court Record Number: 2022/3434P

THE COURT OF APPEAL

JUDGMENT of Mr. Justice Noonan delivered on the 4th day of December, 2024

1 . This appeal concerns a motion brought by the defendant/respondent (“the Bank”) to dismiss the within proceedings brought by the appellants (the plaintiffs) on the grounds that they constitute an abuse of process. In a written judgment delivered on the 21 ^st of March, 2024, the High Court (Phelan J.) acceded to the Bank's application and dismissed the proceedings.

Factual Background

2 . The plaintiffs are the registered owners of a property known as Camelton Stud (“Camelton”) which comprises a farm of some 147 acres with a dwelling house thereon near Summerhill in County Meath. Camelton is comprised in two folios being numbers 2322 and 51205F of the Register of Freeholders, County Meath. It would appear that originally, the entirety of the property was within Folio 2322 but some 2.8 hectares were hived off into Folio 51205F. The plaintiffs are a married couple and described in their pleadings as a barrister and solicitor respectively. They acquired Camelton in 1996 from the first plaintiff's parents who had purchased the property in 1975. The plaintiffs' evidence is that the property was acquired for full value, at that time being IR£350,000.

3 . In 2006 and 2007, the plaintiffs borrowed various sums from the Bank totalling some €1.7m. The plaintiffs provided security for their borrowings by way of a mortgage and charge on Camelton. From December 2010 onwards, the loans went into default and it would seem that over the course of the next year or so, negotiations took place between the parties with a view to resolving matters, but these proved unsuccessful. At some time prior to summer 2012, the plaintiffs say that they became aware of a title issue with Camelton.

4 . The plaintiffs' evidence in this regard is that the entrance to Camelton from the public road together with some 60–100 metres of the entrance driveway to the house are not encompassed within the folios owned by the plaintiffs and are in fact located on a neighbouring folio. There is no right of way registered on the neighbouring folio. Arising from this discovery, the plaintiffs sought the opinion of senior counsel concerning their title to Camelton. Counsel duly furnished an opinion in which he expressed the view that the consequence of this state of affairs is that the plaintiffs do not hold good marketable title to Camelton. Arising from this the plaintiffs assert in pleadings, affidavits and submissions, that Camelton is unsaleable and accordingly has a zero valuation.

5 . At the time that the plaintiffs' loans were raised with the Bank, the first plaintiff's brother, Mr. Michael Keane, principal of Flynn and McMorrow solicitors, acted on behalf of the plaintiffs and provided a certificate of title in respect of Camelton to the Bank. This certificate did not advert to any issues concerning the entrance driveway to the property or rights of way in relation thereto.

6 . It would appear from correspondence exhibited in an affidavit sworn by the first plaintiff that he raised this issue with his brother in the early part of 2012 and in advance of any opinion being sought from counsel. The correspondence suggests that by that stage, the possibility of proceedings for negligence against Mr. Michael Keane was being contemplated by the first plaintiff.

7 . Counsel's opinion was obtained in July 2012 and on the 22 ^nd of November, 2012, the plaintiffs' solicitors wrote to the Bank drawing the matter to its attention. As appears from this letter, the ostensible purpose of writing to the Bank was to have it, rather than the plaintiffs, notify Flynn and McMorrow and their insurers of a potential claim. The expressed concern by the plaintiffs was that a failure by the Bank to notify the insurers of a possible claim before their professional indemnity insurance was renewed on 1 December might result in a difficulty with cover. The letter suggests that if such a difficulty arose, the plaintiffs would hold the Bank responsible “ for the loss incurred”. The letter goes on to say:

“ On that basis Ulster Bank would become its own indemnifier and incur its own loss.”

8 . The purpose of this letter is quite opaque. It appears to state that the plaintiffs have a cause of action in negligence against Flynn and McMorrow, which follows from the assertion that they may suffer a loss if there is a difficulty with Flynn and McMorrow's professional indemnity cover. On the other hand, it suggests that the plaintiffs will hold the Bank responsible for the same loss should the Bank fail to make a claim against the same party. This is, at best, a peculiar proposition in circumstances where there is no obvious reason why the plaintiffs could not themselves do what they appear to be asking the Bank to do in this letter.

9 . In any event, the suggestion that the Bank could have some liability to the plaintiffs for a failure to notify the insurers concerned was firmly rebuffed in a letter from the Bank's solicitors a week later on the 29 ^th of November, 2012 in which they said:

“ Whilst we note your position in relation to the Certificate of Title, you will appreciate that Flynn McMorrow was engaged by your client. In this respect, it is undeniably your client's duty to report any allegation of negligence or breach of duty in the context of that relationship. We presume that your clients have put Flynn McMorrow on notice of the position in that regard.

We confirm that we will request that Flynn McMorrow notify their Professional Indemnity Insurers of the situation that has arisen however we fervently reject any claim that any loss occasioned to your client as a result of a failure in the Professional Indemnity Cover is in any way connected to our client. This is particularly so in circumstances where your client could easily have notified its own solicitor of the potential claim …”

10 . In apparent response to this letter from the Bank's solicitors, the plaintiffs' solicitors wrote the next day, the 30 ^th November, 2012, to both Flynn and McMorrow and their insurers notifying them of a potential claim by the plaintiffs arising out of the title matter. On the 21 ^st December, 2012, Flynn and McMorrow wrote to the Bank's solicitors acknowledging receipt of counsel's opinion and refuting the suggestion that there was any potential difficulty with the right of way and alleging that the instructions that the first plaintiff had given to counsel concerning the matter were incorrect. This is dealt with further below.

11 . A year and a half later, the Bank issued proceedings against Flynn and McMorrow on the 6 ^th June, 2014. The proceedings were not at that time progressed. In 2015, the Bank disposed of a loan portfolio to Seaconview Limited, later DAC, which included the plaintiffs' loans by way of transfer on the 23 ^rd October, 2015. In 2016, a motion was brought by Flynn and McMorrow to dismiss the Bank's proceedings for want of prosecution and this came on for hearing before the Master of the High Court in July 2016. On the 19 ^th July, 2016, the plaintiffs' solicitors wrote to Capita Asset Services (Ireland) Limited on the basis that this company was managing the plaintiffs' loans on behalf of Seaconview. In that letter, the plaintiffs' solicitors complain of the failure of the Bank to serve a statement of claim in the proceedings against Flynn and McMorrow and went on to say:

“… In the event that Ulster Bank (or you if you now own that cause of action) permits that action to be struck out then our clients will hold the owner of that action responsible for the amount that it would have recovered in the event that the action was to be successful. The proceedings can only have been issued on foot of an expert's report indicating that there was indeed professional negligence on the part of Mr. Michael Keane.

In addition, our clients reserve their entitlements under the Civil Liability Act including holding Seaconview Limited and/or Ulster Bank responsible as joint tortfeasors in respect of that loss.”

12 . A letter was written in similar terms to the Bank's solicitors. The Bank's solicitors, who were also now representing Seaconview, responded to this correspondence by letter of the 25 ^th July, 2016 refuting the suggestion that the plaintiffs had any interest in the litigation between the Bank and Flynn and McMorrow saying, inter alia:

“… Any proceedings relating to third parties are entirely a matter for Ulster Bank Ireland Limited and/or Seaconview Limited. Your clients have no interest in any litigation with a third party, which arise from a direct relationship between our clients and the third party…

Any losses which you say your clients have suffered due to any issue with title and marketability of their property are entirely a matter for your clients and their former solicitor. Although such assertions by your clients (if true) may form the basis of a claim for indemnity from their Solicitor, it does not affect the loan contract with Seaconview Limited, as lawful successor in title to Ulster Bank Ireland Limited. Our clients have absolutely no obligation to take any action to mitigate your client's losses and we entirely refute the suggestion that there is an obligation to progress any litigation for the benefit of your clients.

Any suggestion that either of our clients are amenable to being deemed a joint tortfeasor with Mr. Michael Keane will be vigorously defended and we will use this letter in an application to fix you with the costs arising from any such applications.”

13 . On the 20 ^th July, 2016, the Master dismissed the Bank's...